Summary The technical outlook is quite concerning, with the chart and moving averages looking very bearish. Indicators are mixed in their signalling. MARA Holdings' most recent earnings show overall strong financial figures as well as healthy operational metrics. MARA stock seems to be modestly undervalued, as there are some inconsistencies with how the P/S ratio reflects revenue growth. As a result of the bearish technicals, I initiate MARA at a hold rather than a buy, as the fundamental setup is actually net positive in my view. Thesis Despite Trump 2.0's pro-crypto stance, MARA Holdings, Inc. (MARA) stock has fallen over 40% in the past year. In the below analysis, I find that the technicals are highly concerning, with the chart and moving averages being bearish. There are some mixed signals in the indicators that suggest some near-term reprieve, however. As for the fundamentals, I find Q4 earnings to be strong overall, despite relatively sluggish revenue growth. Operational metrics also showed healthy improvements. In addition, after analyzing the P/S ratio, I find that the stock is modestly undervalued versus revenue growth despite being at a premium to the IT sector. Overall, I would say that MARA is currently a hold but if the technicals improve, then the stock would become attractive as the fundamental setup is fine. Technicals Charting Yahoo Finance Trends MARA stock is in a heavy downtrend that doesn't show any signs of ending according to this chart. The stock is experiencing resistance at the trend line currently, and this downtrend has been in effect since late November. There has been an increase in bullish volume lately, but the stock has been unable to breakout thus far. Support There is no support for MARA stock in this timeframe, with the stock being near six-month lows. The six-month low was only set just a few trading days ago. There may be longer-term support if you zoom out, but for this article, I will focus on the last six months of trading activity. Resistance There are three key resistance areas in addition to the downtrend line. The nearest one is in the high 14.8s. This level was a floor for the stock from September to early November. The next resistance level is in the mid-16.6s and represents resistance in mid-September and early October, while being support in December and January. Lastly, there is also resistance at around 20. This level was a downside gap in late January and was also resistance in late October. Takeaway To me, this chart seems quite negative in its signalling. MARA stock is bound in a heavy downtrend with no significant near term support levels below. In addition, there are multiple resistance levels above that should prevent near term gains from occurring. Moving Averages Yahoo Finance Simple Moving Average (SMA) The 50-day SMA recently formed a death cross with the 200-day SMA, a longer term bearish signal for the stock. The 50-day SMA's trajectory worsened in early February, and currently it is on a steady pace downward. With the 200-day SMA holding relatively level, the gap between the lines is expanding significantly to reflect the increase in long term bearish momentum. Exponential Moving Average (EMA) The latest crossover is a bearish one that occurred back in mid-December. That shows the bears have been dominant for an extended period. Currently, the gap between 9-day EMA and the 21-day EMA is significantly large, but recently, it has shrunken marginally as the stock remains above the 9 day EMA. This likely just shows a pause in near term bearish momentum rather than a major shift in sentiment. Bollinger Bands The stock broke above the midline in mid-January, giving hope to the bulls that the downtrend was weakening. However, those hopes were dashed rather quickly as the stock plunged back beneath the midline only days later. Since then, MARA seems to have experienced some resistance at the midline, showing that the downtrend remains intact and strong. Takeaway I believe there are not many positives to take away from these moving averages. The SMAs just recently had a death cross, the EMAs are in a bearish state, and since the stock failed to maintain the midline breakout on the Bollinger Bands, the downtrend is highly intact. Indicators Yahoo Finance Moving Average Convergence Divergence (MACD) After around a month of being inseparable, the MACD slid a notable amount below the signal line in late February. This is a signal of weakness, but overall the gap between the lines has remained relatively small and is now closing as shown by the previous two green histogram bars. This shows that the bears may not be as dominant as feared. Relative Strength Index ((RSI)) The RSI currently has a reading of 39.95 after rebounding from a sub 30 level. That indicates that while the bears are still in control of the stock, their grasp has loosened somewhat. Despite this rebound, the RSI still remains in a downtrend that dates back to the November peak in the indicator, and so further weakness is possible at least until the RSI is able to break out. Stochastics Recently, the %K line broke above the %D line within the oversold 20 zone for a bullish crossover. The gap between these lines is expanding to show that near term bullishness is accelerating. Furthermore, both lines have exited the 20 zone as another signal that the bears' grasp on the stock is now loosening. The next challenge for the stochastics is whether it can break through 50. That would be a sign that the bulls are back in control. Takeaway While there is still overall weakness in each of these indicators, they also show near term improvement that should provide some relief to investors. The MACD histogram is now bullish, the RSI has fought back above the 30 level, and the stochastics had a recent bullish crossover. While both the RSI and stochastics remain below 50, they are showing significant improvements. Fundamentals Earnings Data by YCharts Quarterly Results In late February, MARA reported their 2024 Q4 earnings and showed strong results overall. They posted revenues of $214.4 million, up 37% YoY and a diluted EPS of $1.24, up significantly from the prior year period's $0.66. As you can see in the chart above, revenue growth remains resilient, but it is at below average levels compared with the past three years. Q4's results are unable to sufficiently provide reassurance to investors that the growth slowdown is over. For EPS, Q4's results represents the second-best quarter in the past three years, only bested by 2024 Q1 's $1.26 in EPS. Both of these figures also surpassed expectations quite easily as revenue beat by $30.47 million while GAAP EPS beat by $0.63, showing strong performance versus consensus estimates. Another financial figure worth mentioning is adjusted EBITDA. They reported $794.4 million for this figure, representing YoY growth of 207%. This shows that the operations of the business are experiencing strength. Operational Metrics MARA Holdings Shareholder Letter In terms of their operations, MARA also reported strong figures. They reported that their total blocks won is up 25% YoY to 703 for Q4. Their cost of revenue per petahash per day improved by 5% from the year ago quarter. For energized hashrate, they posted a figure of 53.2 EH/s, up 115% YoY. Furthermore, MARA bested four other comparable miners in this metric by a healthy margin. At the end of the year, they had a total of 44,893 bitcoin as they mined 2,492 bitcoin and purchased another 15,574 in their Q4. Overall, I believe these operation metrics were strong and suggest to me that the business is experiencing meaningful improvements in efficiency and performance. With Trump 2.0's crypto-friendly policies likely coming in the near future, MARA looks prepared to be a key beneficiary of those tailwinds. Valuation Data by YCharts Price To Sales Ratio (P/S) The P/S ratio is currently at quite far below average levels in relation to the past three years of the multiple's data. It now has a reading of 6.866 after being above 12 in late 2024. This ratio was above 18 at the end of 2023. I believe this ratio shows around fair valuation to perhaps some undervaluation in MARA stock. As discussed earlier, revenue growth is currently showing resilience, but relative to the past three years, it is at below average levels. Therefore, the P/S chart is reflecting the fundamentals rather well, as the ratio is also at a below average level. However, revenue growth is currently significantly better than back in mid-2022 to early 2023, but the multiple is lower now than during most of that period. This suggests some undervaluation and shows inconsistency with how MARA is valued relative to its financials. The Information Technology sector median P/S ratio is currently 3.06 and so the stock is at a major premium to peers. Do note that most companies in this sector are not in the crypto business. Therefore, Trump 2.0 tailwinds may not apply so significantly to them. In addition, MARA's strong EPS results and impressive adjusted EBITDA improvements are likely to justify a premium for its business. Overall, personally, I would pay more attention to the valuation versus financial growth assessment since there may be comparability issues with the IT sector as a whole. Conclusion In the above analysis, I have determined the technicals to be net bearish for MARA stock. It is because of this concerning technical outlook that I believe this stock is a hold because the fundamental setup is actually net positive in my view. Most recent earnings were quite strong and operational metrics were healthy. Furthermore, the valuation seems to be on the low side currently, as the P/S may not fully reflect the resilience of revenue growth. Therefore, if the technicals were to improve to a more neutral position, I would find MARA stock to be rather attractive.
